President Donald Trump met with oil executives Tuesday in the wake of his weekend announcement of a major Venezuela deal and a global shortage on refining capacity that’s keeping gas prices high.
Oil prices are also rising again following attacks on two tankers Monday night in the Strait of Hormuz and the strikes between the U.S. and Iran beginning again for the first time in a month. The closed-door meeting with oil companies at the White House is a sign that Trump is working with the industry to bring relief to American consumers from high gas prices with the midterm elections fast approaching.
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The White House has not released specific details on what was discussed at the meeting.
Gas costs $1 more now than before the Iran war started, and diesel prices have spiked even more — up about $2 since last year, according to the American Automobile Association (AAA). Two-thirds of Americans polled by Gallup in June said they were experiencing “financial hardship” due to gas prices. That’s on par with Gallup poll results to the same question in 2022 when prices surged following Russia’s invasion of Ukraine.
The Venezuela deal
The meeting came after the White House announced a deal for the U.S. to access 65 billion barrels of oil in Venezuela.
Venezuela’s interim government granted a U.S.-backed oil company, North American Blue Energy Partners, access to 17 oil fields for the next 100 years. As part of the deal, the U.S. government has secured a 35% stake in the company “at no cost to the American taxpayer,” and a guarantee to purchase 80% of the company’s output from Venezuela, the White House said.
The White House plans to use the oil to refill the Strategic Petroleum Reserve, which sits at a 40-year low after the reserve was tapped by the Biden administration in 2022 and then again by the Trump administration throughout the current Iran conflict.
It’s unclear how the U.S. oil industry will respond to the Venezuela deal.
U.S. oil companies had their assets in the country seized by the government in 2007 under President Hugo Chávez. After the U.S. ousted President Nicolás Maduro in January and pushed the oil companies to invest in Venezuela, the industry expressed doubts. ExxonMobil CEO Darren Woods called the country “uninvestable” during a meeting at the White House.
Ed Hirs, an energy economist at the University of Houston, told Straight Arrow that the U.S. oil industry is now largely staying quiet about the Venezuela deal, but he suspects those doubts remain.
In his interpretation of the deal, Hirs said the government will effectively “subsidize and build a competitor” to American companies. “The administration is again setting up to betray one of the industries that supposedly voted it in: the American oil man.”
US Refining Capacity
In mid August, the output of U.S. refineries was already at over 97% of the industry’s total capacity to process crude oil into gasoline and other products, according to data from the U.S. Energy Information Administration.
“With virtually all capacity mobilized, there is little redundancy to absorb another major unit going offline,” wrote energy scholars at Columbia University’s Center on Global Energy Policy, in a commentary released last week.
Refineries typically undergo maintenance and switch to winter fuel blends during the fall. There’s also the threat of hurricane season, with Tropical Storm Edouard approaching the epicenter of American refineries on the Gulf Coast of Texas and Louisiana.
Some companies are responding to the situation with investments in the existing refinery network.
On Tuesday, CITGO announced an upgrade of its refinery in Lake Charles, Louisiana, with a $300 million investment.
The Trump administration has also supported revived efforts to build a new refinery in Brownsville, Texas. The America First Refinery — owned by India-based Reliance Industries — aims to become the first refinery to open in the U.S. for nearly 50 years.
Round out your reading
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- Photos and video show exactly where and when Trump visited Ground Zero after 9/11.
